Ethics management in municipal governments and large firms: exploring similarities and differences.

In recent years, concern with ethics has increased in both the public and private sectors. This issue, thought by many to be a passing phenomenon in the 1980s, is now a salient, strategic issue for public and private organizations in the mid-1990s. However, the literature on ethics is often normative and prescriptive, and it suffers from too little empirical data about which ethics organizational strategies are adopted in business and government (Menzel & Benton, 1991; West, Berman, & Cava, 1993). This study examines the ethics management strategies of large cities and firms with the purpose of exploring whether general public-private sector differences that have been hypothesized in the literature are reflected in ethics management practices.

The nation's 2,711 cities are highly diverse, as are large U.S. companies, but the literature often fails to capture this diversity when examining ethical issues. Although published works contain references to ethics in particular jurisdictions and firms (Allison & Liebman, 1990; Beauchamp, 1993; Bonczek, 1992; Hartley, 1993; Menzel, 1992; Stewart, 1988) and comparative studies of attitudes and values in groups of managers (Baldwin, 1987, 1991; Nalbandian & Edwards, 1983), there are no systematic studies that compare the ethics management practices between the two sectors. This study addresses this lacuna by comparing the ethics management practices found in the two sectors.

Previous attempts to gauge ethical activities in organizations provide a mixed picture. For example, Bowman's (1990) survey of members of the American Society for Public Administration (ASPA) finds that although 70% think that interest in ethics is steadily growing over time there is also widespread concern that this newfound interest does not go beyond rhetoric. In some instances, agencies avoid confronting ethical wrongdoing. In addition, Bowman concludes that most agencies do not have well-defined approaches in dealing with ethics. Similarly, surveys conducted in the private sector suggest uneven implementation of ethics management objectives (EMOs) and the policies, codes, and activities that flow from them (Ethics Resource Center [ERC], 1990). A better understanding is needed of the reasons driving organizational concern about ethics, the specific ways in which organizations show this concern, and the consequences of adopting policies whose objectives are to further ethics. This study is an exploratory effort to provide such understanding.

There are differences and similarities between this research and Bowman's (1990) landmark study. Key differences are (a) the present study reports reasons for concern about ethics and strategies used in implementing EMOs to a much greater extent than Bowman's work; (b) Bowman's attention to codes of ethics deals much more with ASPA's code and less with agency codes, whereas ours focuses more on the substantive content and implementation of municipal codes and less on professional codes; (c) Bowman surveys attitudes, perceptions, and policies/practices with the latter receiving general and limited attention; our survey focuses in greater detail on a wider range of organizational policies and practices regarding EMOs with less attention to perceptions and attitudes; and (d) his study reports exclusively on data drawn from ASPA members, whereas our approach uses data from municipal and corporate human resource (HR) managers to examine comparative hypotheses derived from the literature. Despite these differences, this study is similar to Bowman's in its attention to organizational policies, codes, and activities.

This study is mindful of the theoretical and methodological difficulties involved in comparing public and private organizations (Lan & Rainey, 1992; Perry & Rainey, 1988; Rainey, 1979, 1983; Rainey, Traut, & Blunt, 1986). As Rainey, Backoff, and Levine (1976) have noted, it is difficult to draw "a clean line between sectors; there are always intermediate types and overlaps on various dimensions." Nevertheless, these authors observe,

It seems clear that one could identify large groups of organizations which represent a hard core of public and private organizations, in that they are distinct on a number of basic characteristics (and magnitudes).... It seems reasonable to speak of "typical" government and business organizations.

In this study, the "typical" public organization is identified as a city government and the typical private organization is a large corporation.

FRAMEWORK

Ethics is often defined in the literature as standards of right and wrong conduct (Bowman, 1991; Cadbury, 1987; Mainzer, 1991; Stewart, 1991). This study adopts this definition and applies it to the specific activities of organizations rather than individuals. It is posited that the ethics management activities of organizations, no matter how ill defined or explicitly designed, can be understood analytically in terms of objectives and strategies. In this regard, ethics management objectives are defined as the targets of ethics management strategies. Some examples of EMOs are that employees should "avoid conflict of interest" and that the organization will "implement affirmative action." To attain specific EMOs, organizations may adopt ethics management strategies such as requiring financial disclosure and mandating ethics training for all employees.

In suggesting this framework, this study does not assert that all organizations engage in planning activities with regard to ethics-related objectives and strategies. However, this framework does suggest some important questions: To what extent do public and private sector organizations adopt formal approaches to ethics management? Which objectives and strategies are most common? What reasons drive organizations to adopt formal approaches? The analytical framework also leads us to ask whether strategies affect perceptions about the attainment of ethics management objectives.

Regarding the content of ethics, many organizational activities focus on minimizing wrongdoing, and policies are often directed toward this end (Truelson, 1991; Zimmerman, 1987). Organizations set standards of negative behavior that are dictated by laws and by the need to survive, whereas, given the diverse constituencies of many organizations, obtaining consensus on positive standards of behavior is much more difficult. Therefore, most policies offer guidance on behavior that is to be avoided rather than on positive behaviors, which organizations seek to promote. Many different forms of wrongdoing exist that organizations may wish …